Assured Guaranty Ltd. reported an expected loss for Brightline Trains Florida LLC in its 2026 first quarter earnings released Friday.
Assured president and CEO Dominic Frederico said he remains optimistic about the Florida train given the insurer's position in its capital stack.
The move to include the credit in the "net economic loss development" accounting calculation is due largely to the ratings agencies' view of the credit, Frederico said during Friday's earnings call.
"We don't see this as a loss situation, but obviously we have to compare ourselves to what the rating agencies think ... how the regulators view it," Frederico said.
Assured's economic loss development totaled $44 million in the first quarter of 2026, which the company attributed largely to the Puerto Rico Electric Power Authority and Brightline.
It's the first time Assured has highlighted Brightline's position in the accounting measure, and comes after
The insurer wraps $1.13 billion, or 51%, of Brightline's senior so-called Opco bonds, which total $2.219 billion.
Brightline, the nation's only privately operated intercity express train service,
Assured's 51% ownership gives the insurer a controlling vote for remedies if bondholders need to direct the bond trustee to take action.
"There's a lot of activity on Brightline, as you can appreciate, and a lot of words in the marketplace in terms of the operations of the organization," Frederico said in response to an analyst's question about whether the insurer has been approached about forbearance or restructuring. Frederico did not directly respond to the question, instead highlighting the firm's position in the train's capital stack.
"However, if you look at our structure in terms of capital, the capital stack is roughly $7 billion. We're half of the top $2.4 billion. You say to yourself, is the company worth at least $2.4 billion? The answer resoundingly comes back absolutely," he said.
Net economic loss development or benefit represents the change in net expected loss to be paid or recovered "attributable to the effects of changes in the economic performance of insured transactions, changes in assumptions based on observed market trends, changes in discount rates, accretion of discount and the economic effects of loss mitigation efforts," the company said in its report.
Accounting models require the company to "consider all possible scenarios," Frederico said Friday.
"At the end of the day, we believe in the structure," he said. "We believe in our credit underwriting. We stand back on our historical results. Time is on our side," he said. He noted that the Brightline insured bonds are structured as interest-only through 2042, totaling about $58 million annually.
"As I said, I don't mind owning a railroad for $2.4 billion," he said.
Later, in response to a question about capital management, Frederico said the company needs to make sure it has sufficient capital to "protect ourselves from some myopic views of loss activity, such as Brightline in terms of what the capital charges are coming out of the rating agencies for that."
The project has about $5.5 billion of tax-exempt, taxable, unrated and junk-rated bonds. That includes the Opco bonds that have endured a bruising series of downgrades in the last year. The senior bonds currently have underlying ratings of CCC/negative by Fitch Ratings, CCC-plus/negative by KBRA, and are no longer rated by S&P Global Ratings after the agency in March
The long-term rating on the insured Opco bonds are AA/stable from S&P and AA-plus/stable from KBRA based on Assured's wrap.
More than $2.5 million of the Assured senior bonds with a 5.25% coupon due in 2053 traded Monday at 99/5.45%, according to Electronic Municipal Market Access website.
More than $12.6 million of the uninsured senior bonds with a 5.25% coupon due in 2047 last traded on April 29 for 70.5/8.275%, according to EMMA.
Brightline Florida, like Brightline West on the West Coast, is owned by Fortress Investment Group.
